Ur-Energy
Releases 2020
Year
End Results
Littleton,
Colorado (InvestorsHub
NewsWire –
February
26,
2021)
Ur-Energy
Inc. (NYSE
American:URG)(TSX:URE) ("Ur-Energy" or the
"Company") has filed the
Company's Annual Report on Form 10-K,
Consolidated
Financial Statements, and Management's Discussion & Analysis,
all for the year ended
December 31, 2020,
with the U.S. Securities and Exchange Commission
on
EDGAR at
www.sec.gov/edgar.shtml and with Canadian
securities authorities on SEDAR at www.sedar.com.
These
filings also may be accessed on the Company's website at
www.ur-energy.com. Shareholders of
the Company may receive a hard copy of the consolidated financial
statements, free of charge, upon request to the Company.
Ur-Energy CEO, Jeff
Klenda said:
"We
look forward to 2021 as a year with numerous prospective catalysts
for the domestic uranium recovery industry – catalysts
from
which
our
proven
operational results at Lost Creek position
us
to
benefit.
We are
pleased that,
already,
the
Biden Administration has committed to
integrate nuclear energy into its clean energy mandate,
which is coupled with its pledge,
expressed just this week, to
'expand
and strengthen domestic mining and processing
capacity'
of
the U.S. These
priorities,
and the growing bipartisan support for nuclear
energy,
will
facilitate the formation
of
the national uranium reserve approved in December
2020,
as
well as implementation of other recommendations of the
U.S.
Nuclear
Fuel Working Group.
"At
February 24, we had
$18.6 million in cash, allowing us to maintain and strengthen our
operational readiness at Lost Creek to
return
to full production levels when conditions warrant.
Additionally, we
have nearly 285,000 pounds U3O8
in
inventory at the conversion facility. Our experienced
technical and operational staff continues to optimize processes and
future production plans at the site. We await the
formal establishment
of the uranium reserve to
respond to the procurement process.
We stand
ready to provide Lost Creek's
production
inventory
to
the reserve to
further its purposes in protecting our energy and national
security."
Financial
Results
As of
December 31, 2020, we had cash resources consisting of cash and
cash equivalents of $4.3 million. Excluding NRV
adjustments,
we recognized a
gross profit related to
U3O8
sales
of $3.1 million, which
represents a gross profit margin of approximately 38
percent. The Company
realized an average price per pound U3O8
sold
of $41.50,
as compared to $48.50
in
2019. The sales were
all from term contracts.
Lost
Creek Operations
As in recent years,
controlled production operations continued at Lost Creek throughout
2020. The originally planned wells and HHs in MU1 and the first
three HHs and the related wells in MU2 were available for operation
through much of 2020, until we further reduced our production
levels in Q3 2020.
During 2020, 10,789
pounds of U3O8
were
captured within the Lost Creek plant and 15,873 pounds
U3O8
were
packaged in drums. At
December 31, 2020,
inventory at the conversion facility was approximately 268,485
pounds. Subsequent to year-end, we delivered an additional shipment
to the conversion facility.
Currently, we have approximately 284,358 pounds in inventory at the
conversion facility.
Lost Creek MU1 and
MU2 have all appropriate operating permits. The main trunkline that
services the first five MU2 HHs has been installed, and the
entirety of MU2 has been fenced. In addition, during the most
recent development program, approximately 45% of the required wells
for HH2-4 have been drilled and cased. These earlier development
activities in MU2 will allow for a quick ramp up of production once
market fundamentals change.
The
following tables provide detailed financial information on our
sales, cost of sales,
and
production and ending inventory as they relate to
U3O8
pounds.
The U3O8
and cost per pound measures included in the following tables do not
have a standardized meaning within US GAAP or a defined basis of
calculation. These measures are
used by management to assess business performance and determine
production and pricing strategies. They may also be used by certain
investors to evaluate performance. Where applicable, reconciliation
of these measures to US GAAP financial statement presentation are
included within the respective table.
Sales
Note:
-
Sales
per the financial statements include revenues from disposal fees
received at Shirley Basin. The disposal fees do not relate to
U3O8
pounds
sold and are excluded from the U3O8
sales
and U3O8
price
per pound sold figures.
Cost of Sales
Note:
1.
Cost of
sales per the financial statements include lower of cost or net
realizable value ("NRV") adjustments. The NRV adjustments do not
relate to U3O8
pounds
sold and are excluded from the U3O8
cost of
sales and U3O8
cost per
pound sold figures.
Cost of sales per
the financial statements includes ad valorem and severance taxes
related to the extraction of uranium, all costs of wellfield and
plant operations including the related depreciation and
amortization of capitalized assets, reclamation, and mineral
property costs, plus product distribution costs. These costs are
also used to value inventory. The resulting inventoried cost per
pound is compared to the NRV of the product, which is based on
the estimated sales price of the product, net of any remaining
costs to finish the product. Any inventory value in excess of the
NRV is charged to cost of sales per the financial statements. These
NRV adjustments are excluded from the U3O8
cost of
sales and U3O8
cost
per pound sold figures because they relate
to the pounds of U3O8
in
ending inventory and do not relate to the pounds of
U3O8
sold
during the period.
U3O8
Production and Ending Inventory
During 2020, we
took steps to further reduce production operations at Lost Creek
and adjust to the continued depressed state of the uranium markets
while we awaited the recommended relief from the Working Group and
further positive developments in the uranium markets. As a result,
production rates at Lost Creek declined during the year. Pounds
captured decreased nearly 80 percent during the year and will
remain low until a decision to ramp up
is made. Pounds drummed decreased similarly. There were no
shipments in 2020 as we accumulated enough product for the next
shipment, which was made in January 2021.
At the end of the
year, we had approximately 268,485 pounds of U3O8
at the
conversion facility including 219,735 produced pounds at an average
cost per pound of $27.68, and 48,750 purchased pounds at an average
cost of $26.01 per pound. Including the January 2021 shipment, we
have approximately 284,358 pounds of U3O8
at the
conversion facility including 235,608 produced pounds.
Year
Ended December 31, 2020 Compared to Year Ended December 31,
2019
The
following table summarizes the results of operations for the years
ended December 31, 2020 and 2019:
(expressed
in thousands of U.S. dollars, except per share and pound
data)
2021 Guidance
Following multiple
announcements of industry production suspensions and reductions in
2020, U3O8
spot
prices increased to $33 per pound, but subsequently decreased to
approximately $30 per pound at year-end. More recently,
recognition of nuclear power's role in achieving net-zero carbon
emissions goals has seen a renewed interest in the uranium sector.
The Paris Climate Agreement calls for net-zero carbon emissions by
2050 and the U.S. has rejoined the agreement under the Biden
Administration, which has indicated support for the nuclear
industry.
In February 2021,
we raised gross proceeds of $15.2 million through an underwritten
public offering. Our current cash position as of February 24, 2021,
is $18.6 million. In addition to our strong cash position, we
have nearly 285,000 pounds of finished, ready-to-sell inventory,
worth $8.0 million at recent spot prices. The financing provides us
adequate funds to maintain and enhance operational readiness, for
possible future acquisitions, and for general working capital
purposes, including the preservation of our existing inventory for
higher prices.
In addition to the
restructuring of the State Bond Loan, we implemented other
Company-wide cost-saving measures during 2020. We further reduced
production operations at Lost Creek to market-appropriate levels.
The reduced production levels allowed us to make further operating
cost reductions at Lost Creek and related support cost reductions
at the corporate office. The cost reductions include savings from
additional reductions in force and other cost containment measures.
Together with the further deferral of principal payments on the
State Bond Loan, these measures will result in substantial savings
to the Company, estimated to exceed $7 million
and $4 million in calendar years 2021 and 2022,
respectively.
Our remaining
highly experienced technical and operational staff will continue to
optimize processes and refine production plans, which strengthens
our operational readiness at the fully permitted Lost Creek mine
and plant. The Lost Creek facility has the constructed and licensed
capacity to process up to two million pounds of
U3O8
per
year and previously reported mineral resources to feed the
processing plant for many years to come. A ramp-up of production at
Lost Creek would initially include further development work in the
first two mine units, followed by the ten
additional mining
areas as defined in the Lost Creek Property Preliminary Economic
Assessment, as amended. In 2021, we expect to receive all permits
and authorizations to recover uranium from the adjacent LC East
project where certain of those additional mining areas are
located.
We remain prepared
to expand uranium production at Lost Creek to an annualized run
rate of one million pounds. With future
development and construction in mind, our current staff members
were retained as having the greatest level of experience and
adaptability allowing for an easier transition back to full
operations. Lost Creek operations can increase to full production
rates in as little as six months following a go decision, simply by
developing additional header houses within the fully permitted MU2.
Development expenses during this six-month ramp up period are
estimated to be approximately $14 million and are almost entirely
related to MU2 drilling and header house construction costs.
We are
prepared to ramp up and to deliver our Lost Creek production
inventory to the new national uranium reserve.
Additionally, we
stand ready to construct our Shirley Basin mine, where we estimate
up to nine years production based upon the mineral resources
reported in the Shirley Basin Preliminary Economic Assessment. All
remaining permits and authorizations to construct and operate this
in situ recovery site are expected to be received in 2021
H1.
We will continue to
closely monitor the uranium market and any actions or remedies
resulting from the Working Group's report, the implementation of
the uranium reserve program, or any further legislative
actions, which may
positively impact the uranium production industry. Until such time,
we will continue to minimize costs and maximize the 'runway' to
maintain our current operations and the operational readiness
needed to ramp-up production when called upon.
About Ur-Energy
Ur-Energy is a
uranium mining company operating the Lost Creek in-situ
recovery uranium
facility in south-central Wyoming. We have produced, packaged and
shipped more than 2.6
million
pounds from Lost Creek since the commencement of operations.
Applications are under review by various agencies to incorporate
our LC East project area into the Lost Creek permits and to operate
at our Shirley Basin Project. Ur-Energy
is
engaged in uranium mining, recovery and processing activities,
including the acquisition, exploration, development and operation
of uranium mineral properties in the United States. Shares of
Ur-Energy
trade on the NYSE American under the symbol "URG" and on the
Toronto Stock Exchange under the symbol "URE." Ur-Energy's
corporate office is in Littleton, Colorado; its registered office
is in Ottawa, Ontario. Ur-Energy's website is
www.ur-energy.com.
FOR
FURTHER INFORMATION, PLEASE CONTACT
Jeffrey Klenda,
Chair & CEO
866-981-4588
Jeff.Klenda@Ur-Energy.com
Cautionary
Note Regarding Forward-Looking Information
This release may
contain "forward-looking statements" within the meaning of
applicable securities laws regarding events or conditions that may
occur in the future (e.g.,
what
the catalysts for the uranium recovery industry will be in 2021 and
when any of them may be realized; our ability
to
control production
operations at lower levels at Lost
Creek in a safe and
compliant manner;
ability
and timing to receive all remaining permits and authorizations
related to our LC East and Shirley Basin projects;
the
timing to determine future development and construction priorities,
and the ability to readily and cost-effectively ramp-up production
operations when market and other conditions warrant;
the
ability of the Biden Administration to advance their climate change
and clean energy agenda, its timing and
whether meaningful changes for
nuclear
power positively affect the domestic uranium recovery
industry;
the
timing
and program details for establishment of
the new national uranium reserve and continuing
budget appropriations for the ten-year program;
and
further
implementation
of recommendations
from the U.S. Nuclear Fuel Working Group, including the timeline
and scope of proposed remedies and related
budget
appropriations processes)
and are
based on current expectations that, while considered reasonable by
management at this time, inherently involve a number of significant
business, economic and competitive risks, uncertainties and
contingencies. Factors that could cause actual results to differ
materially from any forward-looking statements include, but are not
limited to, capital and other costs varying significantly from
estimates; failure to establish estimated resources and reserves;
the grade and recovery of ore which is mined varying from
estimates; production rates, methods and amounts varying from
estimates; delays in obtaining or failures to obtain required
governmental, environmental or other project approvals; inflation;
changes in exchange rates; fluctuations in commodity prices; delays
in development and other factors described in the
public filings made by the Company at
www.sedar.com and
www.sec.gov. Readers should
not place undue reliance on forward-looking statements. The
forward-looking statements contained herein are based on the
beliefs, expectations and opinions of management as of the date
hereof and Ur-Energy disclaims any intent or obligation to update
them or revise them to reflect any change in circumstances or in
management's beliefs, expectations or opinions that occur in the
future.